On August 19 you sold the APR 15, K=30, call and at the same time you sold the APR 15 K=30 put. Suppose that both options will not be exercised till their expiration; Calculate your profit/loss per share at expiration if MMML’s price at expiration were:
6.1 S = 35; 6.2 S = 30; 6.3 S = 25.
Homework Answers
Cash inflow on Aug 19 = April 15 K=30 call option premium + April 15 K = 30 put option premium i.e. 2.4 + 4 .2 = 6.6
If S = 35
Call option will get exercised in this case and put option premium would be zero
April K = 30 call option outflow at expiration = 35-30 = 5
Therefore profit per share = 6.6 - 5 = 1.6
If S = 30
No option will get exercised in this case.
Therefore profit per share = 6.6 - 0 = 6.6
If S = 25
Put option will get exercised in this case and call option premium would be zero
April K = 30 put option outflow at expiration = 30-25 = 5
Therefore profit per share = 6.6 - 5 = 1.6
Add Answer to:
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The SAT immediately following the third
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Indicate the official expiration dates of the
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